Us economy: jobless claims go up amid soaring COVID cases

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Us economy: jobless claims go up amid soaring COVID cases

WASHINGTON, Jan 6 Reuters -- The number of Americans filing new claims for unemployment benefits went up last week and could increase further in the coming weeks due to the soaring COVID 19 infections.

For the week ending January 1, the Labor Department said initial claims for unemployment benefits increased 7,000 to a seasonally adjusted 207,000. In the past week, claims dropped to 200,000.

The latest week's applications were predicted by economists polled by Reuters. Applications are typically increased during the holiday season, but an acute shortage of workers has disrupted that seasonal pattern, resulting in lower seasonally adjusted claims numbers in recent weeks. There were 10.6 million job openings at the end of November.

An increase in filings for unemployment benefits has been caused by some businesses temporarily closing around the holiday season, according to Veronica Clark, an economist at Citigroup in New York. This effect has been much less during the recent holiday season because of the persistent issue of worker shortages and unemployment levels are already lower than desired. The labor market is tightening, with claims falling from a record high of 6.149 million in early April 2020.

Minutes of the Federal Reserve's Dec. 14 -- 15 policy meeting released on Wednesday showed Fed officials viewed the labor market as very tight. According to minutes, the U.S. central bank might need to raise interest rates sooner than expected and reduce its overall asset holdings to tame high inflation.

A temporary rise in claims is likely due to a rise in claims from nearly 1 million cases-day setting-global record 2022 -- 01- 04 new coronaviruses infections on Monday, the highest daily tally of any country in the world.

Some school districts are suspending in-person learning, which could force some working parents to assume childcare duties. Some businesses are temporarily closing or scaling back services because of workers calling in sick.

A separate report on Thursday from global outplacement firm Challenger shows job cuts announced by U.S. employers increased 28.1% to 19,052 in December. There were only 321,970 jobs left in 2021, which is good for layoffs. Andrew Challenger, senior vice president at Challenger, Gray Christmas, said that the sheer number of COVID cases will affect the labor market, regardless of how severe illnesses are. Those with COVID safety concerns will shun in-person roles. The Labor Department's closely watched December employment report, due to be released on Friday, does not have any bearing on the claims data, as it falls outside the survey period. The employment report last month was released by the government in mid-December.

Non-farm payrolls rose by 400,000 jobs in December after rising 210,000 in November, according to a survey by the Reuters of economists. The unemployment rate is projected to fall to 4.1% from 4.2% in November.

The ADP National employment report showed private payrolls rose by 807,00 jobs last month, which has boosted the prospects of a strong employment report. The December payrolls estimate was raised by 50,000 to 500,000, according to economists at Goldman Sachs.

A measure of manufacturing employment increased to an eight-month high in December, according to a survey from the Institute for Supply Management on Tuesday.